Check the picture below.
A furniture company is introducing a new line of lounge chairs next quarter. These are the cost and revenue functions, where x r
epresents the number of chairs to be manufactured and sold: R(x) = 1,248x – 8.32x2 C(x) = 36,400 – 83.2x For the company to make a profit on the chairs, the selling price can go no lower than $ and no higher than $.
2 answers:
Answer:
No lower than $208, and no higher than $956.8
Step-by-step explanation:
Notice that the revenue (income) function is represented by a quadratic expression (a parabola with branches pointing down), and the cost function is linear with negative slope.
When we plot them, we obtain the graphs shown in the attached image. Notice as well that there are two points of intersection for these two functions. The revenue exceeds (lays above) the cost in between the two points of intersection (marked in red and green).
For the company to make a profit, the revenue has to be larger than the cost, so we study the limiting values for that to happen, which is the points of intersection of these two curves.
The first one (pictured in red) is associated with coordinates (35, 33488) which tells us that is the production of 35 chairs with a revenue of $33,488. That is a cost per chair of $33,488 / 35 = $956.8
The second intersection (pictured in green) is associated with coordinates (125, 26000), which tells us that is the production of 125 chairs with a revenue of $26,000. That is a cost per chair of $26000 / 125 = $ 208
So these values give us the minimum and maximum that the company can charge to make a profit.
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